© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Preparing a Worksheet for a Merchandise Company Chapter 11

Learning Objective 1 Figuring adjustments for merchandise inventory, unearned rent, supplies used, insurance expired, depreciation expense, and salaries accrued. © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Merchandise Inventory - Periodic System Beginning inventory balance remains in Merchandise Inventory account Cost of purchases are recorded in Purchases account throughout the accounting period A physical count of inventory is taken at the end of the accounting period © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Merchandise Inventory - Periodic System Net Sales - Cost of Goods Sold Gross Profit - Operating Expenses Net Income Beginning Inventory + Net Purchases + Freight-In Cost of Goods Available for Sale - Ending Inventory Cost of Goods Sold © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Try Exercise 11-2 Sales$22,000 Less: Sales Returns & Allowances($250) Sales Discounts(500)(750) Net Sales$21,250 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Try Exercise 11-2 Beginning Inventory$650 + Net Purchases13,200 Goods Available for Sale $13,850 - Ending Inventory(510) Cost of Goods Sold$13,340 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Try Exercise 11-2 Net Sales$21,250 - Cost of Goods Sold13,340 Gross Profit$7,910 - Operating Expenses3,600 Net Income$4,310 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Merchandise Inventory - Periodic System To adjust merchandise inventory 1.Remove beginning inventory ◦ Debit Income Summary ◦ Credit Merchandise Inventory 2.Enter the amount of ending inventory ◦ Debit Merchandise Inventory ◦ Credit Income Summary © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Unearned Revenue Unearned Revenue Liability account Records receipt of payment for goods or services in advance of delivery © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Unearned Revenue On December 1, Chambers Company received $3,200 for four months’ rent paid in advance. © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Unearned Revenue On December 31, Chambers has earned one month’s rent. © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-1

Adjustments for Unearned Revenue © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Unearned RentRental Income 3, Bal 2,400 LO-1

Try Exercise 11-3 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Unearned Janitorial Service Janitorial Service 600 7, Bal 200 LO Bal 7,600 _____________

Learning Objective 2 Preparing a worksheet for a merchandise company. © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

Completing the Worksheet We will use Problem 11A-2 to illustrate the completion of a worksheet for a merchandise company. © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

Problem 11A-2 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

Problem 11A-2 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

Problem 11A-2 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

Problem 11A-2 © 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater LO-2

© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater End of Chapter 11